Wednesday, April 24, 2019

Time to buy Gold?

Gold has already broke the resistance of $1000 and the nagging question for an investor now is "Do I buy now? Do I wait for it to drop lower? Is it too expensive?"

Then again, what if gold were to fall? But what if gold were to start a bull run from here?

These are genuine concerns but bottom line is - what is your conviction? If you are listening to the media, you will be just as confused. Do your due own research and this is where your conviction comes in. I have read articles from both sides of the fence and it is interesting to know that gold and silver are actually being manipulated

It is a known fact that Banks are shorting gold and silver and the relentless anti-gold propaganda pitch, that gold will drop, it is a terrible form of investment etc.

Consider this fact - just the past 4 years, since 2005, the price of gold price has doubled. Gold price since year 2000

I have bought gold in 2001 when it was below $300. Gold is now above $1000. Is 230% return is a terrible investment? I have also bought gold when it was at $900 in March 2009 this year - a 10% return

Question? What if Gold price takes off from here? Is it possible?

Let's look at the current scenario

Ben Bernanke has no qualms about turning the printing machine 24x7 at full speed ahead, flooding US dollars to stabilize the financial market or rather, the institutions. Paper money can be printed, virtual wealth "created" from "nothing". But can you created gold and silver - nope. That's the tangible value between precious metal and "legal tender"

If you have read the recent news, China, India, Russia and along with private investors are buying up gold as an investment.

Take a look of the gold held by ETFs since 2005 (

All the gold investment held by gold ETFs worldwide to the tune of 68.2 million ounces, and gold buying momentum by ETFs is not slowing down.

Transparent Gold Holdings

Surprisingly, Central banks are now "switching" roles and have become buyers of gold. Why the sudden change? Are they not the advocate of fiat money? Why the sudden change of heart? Is something going wrong with the "printing money" strategy. Take a hard look at your paper money - it is only legal tender, back by what? A nation already drowned in debt. Does that gives you any confidence.

The World Gold Council reported the central banks have bought 14 tonnes of gold before the later half of 2009. The interesting fact is that they have become a buyer for the first time since 2000.

Ponder this for a moment, if central banks are buying gold even at above $1000, what does it imply? Is there another wave of unpredictable financial crisis looming ahead?

Gold Mine Production 2003 to 2009

This is a chart taken from World Gold Council. It show the production of Gold. It terms of production, it is running low. There will be a supply and demand issue. Where will gold rise to?

If a choice is presented before you, a $1000 banknote and 1 oz Gold coin. Which will you choose?

Since the days of Roman empire, not a single Fiat Currency has ever worked

Remember this - Paper money be reduced to zero but GOLD and SILVER can never be reduced to zero

You can read more about What is Fiat Currency here